Inter Finance Group Ltd v KPMG Peat Marwick T/A KPMG

• Jurisdiction: Ireland
• Judge: Hon. Mr. Justice Morris,
• Judgment Date: 29 June 1998
• Neutral Citation: [1998] IEHC 217
• Docket Number: No. 10585P 1996
• Court: High Court
• Date: 29 June 1998

INTER FINANCE GROUP LTD v. KPMG PEAT MARWICK T/A KPMG

BETWEEN

INTER FINANCE GROUP LIMITED

PLAINTIFF

AND

KPMG PEAT MARWICK TRADING AS KPMG MANAGEMENT CONSULTING

DEFENDANTS

[1998] IEHC 217

No. 10585P 1996

THE HIGH COURT

Abstract:

Practice — Security for costs — Capacity to pay defendant’s costs if action unsuccessful — Whether special circumstances exist which would justify refusing order sought — Companies Act 1963 (No 33) section 390 —Rules of the Superior Courts 1986 (SI No 15 of 1986) Order 29.

To succeed in an application for security for costs the defendant moving party must establish that he has a prima facie defence to the plaintiff’s claim and that the plaintiff will not be able to pay the defendant’s costs if successful in his defence. Once established the onus is on the plaintiff to point to specific circumstances which would justify the court in exercising its discretion not to make the order sought eg that the plaintiff’s inability to pay stems from the wrong allegedly committed by the defendant or that there has been delay in the defendant’s application or some other special circumstance. The plaintiff had failed to establish the existence of any special conditions in this case. The High Court so held in granting the order sought by the defendant and sending the matter forward to the Master to fix the amount of security.

Citations:

RSC O.29

COMPANIES ACT 1963 – 1990 S309

SEE CO LTD V PUBLIC LIGHTING SERVICES LTD 1987 ILRM 255

JACK O'TOOLE LTD V EOIN KELLY ASSOCIATES 1986 IR 277

EUROPEAN COMMUNITIES (LEGAL PROTECTION OF COMPUTER PROGRAMS) REGS 1993 SI 26/1993 REG 3

1 Judgment of the Hon. Mr. Justice Morris, delivered the 29th day of June, 1998.

Hon. Mr. Justice Morris,

2 This matter comes before the court as a Motion brought by the defendants pursuant to Order 29 of the Rules of the Superior Courts seeking an order directing the plaintiff herein to furnish security of the costs of these proceedings together with ancillary reliefs.

3 In so far as is relevant to this application the core facts of the case may be summarised as follows:-

4 In 1993 the plaintiff conceived an idea of developing a software package that would assist large organisations to run their accounts departments to integrate the functions of the issuing of invoices and statements the management of credit control and debt collection. The plaintiff intended to sell on the said accounting system to customers or the rights therein to third parties and obtained the services of the defendants to act as computer consultants to develop the package.

5 The contract between the parties was entered into between August 1993 and January 1994 and under the contract the defendants agreed to design a software package to the plaintiff's specifications.

6 It is the plaintiff's case that there was an obligation on the defendants to observe confidentiality in relation to the development of the software package and do all things necessary to test the package so as to enable the plaintiff fully to exploit the software package and accountancy scheme as it saw fit.

7 The plaintiff claims that the defendant in breach of the contract purported to sell and install the software system in a number of other sites, held itself out as owning the software system and failed to take the necessary steps to put the plaintiff in a position to exploit the software package. The plaintiff claims as a result he has suffered loss and damage.

8 It may well be that the plaintiff company will find it necessary to join a second company as a co-plaintiff in the action however this fact is not material to the present application because it is accepted by both the existing plaintiff and the contemplated additional plaintiff that neither of them is in a position to discharge a Bill of Costs if the defendants succeeded in the action and was awarded costs against it or them.

9 While not expressly stated in the Notice of Motion the application is brought pursuant to section 309 of the Companies Acts1963to 1990(the plaintiff makes no point that this section is not specifically referred to in the Notice of Motion).

"Where a limited company is plaintiff in an action or other legal proceedings, any judge having jurisdiction of the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until security is given".

The relevant part of the section provides;

10 No issues arises on the capacity of the plaintiff or the possible co-plaintiff to pay the costs of the defendant if successful. It's inability to pay is accepted by the plaintiff.

11 The authorities upon which an application of this nature is to be determined areS.E.E. Company Limited -v- Public Lighting Services Limited 1987 ILRM p. 255 and Jack O'Toole Limited and Eoin...